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The noble Lord said: Amendment No. 20 was foreshadowed by the promoter's response to the House of Lords Select Committee's special report, which said:

Therefore, the amendment is in direct response to petitioners' concerns, heard by the committee, that Clauses 40 and 41 could be used to subvert normal regulatory processes. That was never the purpose of these clauses, as I will explain in a moment. However, I note that the noble Lords, Lord Berkeley and Lord Bradshaw, have given notice of their intention to oppose that Clauses 40 and 41, and the associated multiple proceedings clause, Clause 42, stand part of the Bill. I hope that my explanation of my amendment and the circumstances in which the clauses might apply will reassure the noble Lords that we have

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indeed dealt with the railway petitioners' concerns to the satisfaction of the committee, and why the provisions are still required.

Clause 40 is based on a provision contained in the Channel Tunnel Rail Link Act 1996, and provides an obligation to co-operate between the nominated undertaker and controllers of railway assets with which Crossrail construction, maintenance or operation interact. Either party can require the other party to enter into an agreement. The purpose is to ensure that neither the nominated undertaker nor the controller can act unreasonably in dealing with a problem relating to the interaction of the Crossrail works with overland or underground railway assets. The asset controllers in question include London Underground and the public-private partnerships, BAA and Network Rail.

If the parties cannot reach agreement under Clause 40, the matter is referred to arbitration—the mechanism for which Clause 41 sets out. The Secretary of State may then, under Clause 41(3), direct the arbitrator as to the results that are to be achieved by the settlement—in practice, to set the arbitrator strategic policy objectives. If a direction were given, the arbitrator would have full control over the terms, including as to compensation, for achieving the overall results that the Secretary of State specifies.

Clause 41(3) is necessary to avoid the possibility that the result of the arbitration prevents something that is critical to the delivery of the Crossrail project, as authorised by Parliament, from happening on fair terms. Therefore, the direction of the Secretary of State will generally only be to facilitate the completion of the Crossrail works, or completion within a reasonable timescale, or the subsequent maintenance or operation of the all-important services that Crossrail will deliver. Even then, the Secretary of State would ensure that Crossrail is not delivered to the unreasonable detriment of the rest of the transport network—an issue that has been a particular concern this afternoon.

Amendment No. 20 ensures that Clause 40 cannot be used in circumstances where the matter may be dealt with by the ORR, in effect requiring a solution to be reached under the aegis of the normal regulatory processes. Indeed, Clause 40 should not supplant or override the allocation of access rights under the Railways Act 1993, the taking of possessions under the network code as overseen by the ORR, nor our stated intention to work within normal industry processes as far as possible in connection with the Crossrail project. If Clause 40 does not apply in these circumstances, Clause 41 will be irrelevant in these circumstances, because Clause 41 applies only to arbitrations referred under Clause 40.

However, there are other circumstances where Clauses 40 and 41 might apply. For example, the Crossrail works at Farringdon station will involve a complex interface with other construction works and non-regulated asset controllers, such as London Underground. It is therefore recognised that this complexity requires managing in order to ensure the successful delivery of the Crossrail project at this location. In particular, it may be necessary for the Secretary of State to ensure that the terms of a London Underground or PPP contract, which is not regulated

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by the Railways Act 1993 or within the ORR's jurisdiction, do not unreasonably prevent something that is critical to the delivery of the Crossrail project, which has been defined as part of the Bill process, from happening on fair terms. Nevertheless, Clauses 40 and 41 remain only as fallback provisions, as it is also recognised that, in this example for instance, London Underground, as a key delivery partner to the project, will have a direct interest in integrating Crossrail works successfully with its own existing assets, and many agreements are already in place regarding these matters.

It has also been put to me that Clause 40 might be used to deal with Crossrail’s interaction with the unregulated Heathrow Express service. The department has negotiated a number of specific agreements with BAA and Network Rail about the construction and operation of Crossrail, which means that it is highly unlikely that the Secretary of State would need to rely on Clause 40 in relation to Crossrail’s interaction with Heathrow Express.

I apologise again for the lengthy exposition, but I know that these clauses have excited considerable interest, and hope that my explanation provides some of the context and reasoning behind the amendments—for example, why Clauses 40 to 42 are still necessary and should stand part of the Bill. In those circumstances, I hope that noble Lords will withdraw their opposition to Clauses 40 to 42. I beg to move.

Lord Berkeley: I am grateful to my noble friend for his explanation of the context of Amendment No. 20, which we all welcomed when it was first published. I do not understand why the three clauses are needed at all. That is the purpose of the noble Lord, Lord Bradshaw, and I giving notice of our intention to oppose clause stand part.

During the Select Committee discussions, the Government agreed to take away the railway clauses, as we called them, and rely on the industry processes led by the ORR to settle disputes. There still seems to be a problem with settling disputes with London Underground and its PPP. It is a coincidence that effectively the regulator of the PPP is the same person as the chairman of the Office of Rail Regulation—Chris Bolt. It is interesting that the Government are happy with his role wearing one hat, but not with the other one.

Noble Lords will remember the immortal words of the chairman of the Select Committee, the noble Viscount, Lord Colville, about Clause 41(3), when he said that it was Stalinist. You do not often hear people in your Lordships’ House using that word, but he being an eminent lawyer, he felt—and I agree—that having a clause that allows the Government to tell the arbiter what decision to make is, shall we say, unusual? I do not see why with the standard industry processes the arbiter for London Underground and the PPP—Chris Bolt—needs to be told the decision he should make when the Government have accepted for the rest of the railway to leave it to the ORR.

My noble friend mentioned Farringdon station. Of course, LUL will have a very strong objective in sorting out the problems. If there is a problem, and Chris Bolt and the ORR are able to deal with it on the railways,

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why, wearing his other hat—which I think is for two days a week—cannot he do it for London Underground? Requiring people to co-operate may be a good idea but if they then take it as far as arbitration, which is expensive, and they know that they will then be told by the Government what to do, that degrades the whole process that has been so nicely agreed for the rest of the railway.

I also hear what my noble friend said about BAA, and it is good that there is nearly an agreement. It is completely unregulated. At least the PPP is regulated in part. I do not know what BAA thinks about this clause but I am not sure that my noble friend has persuaded me that we need these three clauses at all. If we are to keep them I certainly welcome his Amendment No. 20 to Clause 40.

Lord Bradshaw: I support what the noble Lord, Lord Berkeley, has said. Clause 41(3) is actually quite objectionable. It says:

It sounds very much as if you appoint an arbitrator and then the Secretary of State tells him what result he must come to. It certainly reads like that—and it is not the sort of thing that should appear in a Bill before your Lordships' House.

4 pm

Lord Bassam of Brighton: I repeat what I said earlier. While I sort of understand why the noble Viscount, Lord Colville, might have used slightly extreme language in the circumstances, we have always said that it is our stated intention to work within normal industry processes as far as possible with the Crossrail project. All the parliamentary processes have been aligned with the intent of securing Crossrail in a reasonable timeframe, at a reasonable price and by agreement. Credit should be given to Crossrail promoters; an awful amount of work has gone into this and a fantastic degree of consensus has so far been archived. The hybrid Bill process has enabled many issues that had seemed deeply contentious to be resolved in terms that seem reasonable to all parties.

So our track record to date is pretty good. It is not our intention to depart from that but there may be some circumstances in which the Crossrail project is frustrated by an unknown provision in a PPP that had not been anticipated or did not in itself anticipate Crossrail. In those peculiar circumstances, this fallback provision—and that is what it is, as we have made clear—may well be necessary.

Although I can understand the noble Viscount’s description, it is not appropriate in terms of a power that is designed to ensure the successful completion of the project. That is not an unfair observation on our part. I appreciate the fact that the noble Lord, Lord Berkeley, can see that we have attempted to offset and mitigate that with our amendment. I ask him to take that as a fairly solid expression of good faith on our part, to recognise that there is, in extremis, potential

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for some abuse to be delivered by the provision—but that is not our intention. It is really only to be used as a term of last resort.

All that I can observe about Chris Bolt is that he is the arbiter for London Underground PPPs. He is not a regulator in any sense parallel to the Railways Act; that must be properly understood. I do not accept the noble Lord’s point on that.

I invite the Committee to support our amendments as they are a practical way in which to deal with and meet the objections raised, while giving us the reserve provision to be used only in circumstances which many of us at this stage cannot even envisage.

Lord Bradshaw: I hear what the noble Lord says, but I return to the fact that this is an objectionable subsection; I cannot see the purpose of it. If he is saying that if the parties—the constructor, the ORR and Network Rail—cannot come to an agreement, then they can bring their problems to the Secretary of State who will somehow dissolve those problems, I do not believe it. The clause may give the noble Lord comfort, but it gives me none at all. I urge him to go away and think about it before Report.

Lord Berkeley: I know that the arbiter for the PPP is a different name and has different functions from the ORR, but when it comes to appeals or arbitration, they are effectively the same. He is called an arbiter for the PPP, and there is the regulator, but we are not talking about all the other duties. It is purely arbitration. There are enormous similarities, and the noble Lord, Lord Bradshaw, has made the point succinctly.

On Question, amendment agreed to.

Clause 40, as amended, agreed to.

Clauses 41 to 45 agreed to.

[Amendments Nos. 21 and 22 not moved.]

Schedule 11 agreed to.

Clause 46 agreed to.

Schedule 12 [Transfer schemes]:

Lord Bassam of Brighton moved Amendment No. 23:

“Scheme for grant of lease

The noble Lord said: These amendments will not detain us too long. They are technical and they relate to the granting of new land interests. Schedule 12 already provides for the granting of new land interests as part of a transfer of assets between or from public bodies, which are known as “transfer schemes”. The amendments to Schedule 12 would enable the simple grant of new land interests, such as a lease, to happen by way of a transfer scheme, even where this is separate from the transfer of other assets.

The amendment will enable the Secretary of State to retain flexibility over how she puts the land ownership arrangements required for Crossrail in place. Given the long duration of the project, it is sensible for her to

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retain that flexibility. The amendments proposed to Schedule 13 are consequential and avoid a tax distinction arising based on the type of transfer scheme under which a lease is created. I beg to move.

On Question, amendment agreed to.

Lord Bassam of Brighton moved Amendment No. 24:

“Agreements relating to schemes

The noble Lord said: The amendments will ensure that the Secretary of State and London government can give an unqualified commitment at the start of the Crossrail project in relation to a potential transfer of assets between Transport for London and the Secretary of State at a later stage.

Governance arrangements for the project currently allow that if the forecast final cost breaches an agreed level, the department has the right to take back control of the project, including ownership of CLRL and therefore, indirectly, assets of Crossrail. However, the GLA Act provides that, at any given time, TfL should follow the guidance or directions of the mayor in the exercise of its functions and that the Secretary of State must consent to the disposal of assets by TfL. The provisions being sought are permissive and do nothing more than clarify that the obligations entered into on signature of the sponsor agreement will endure. The amendment covers actions for purposes connected with Crossrail only and is not an amendment to the general applicability of the GLA Act. The provisions also allow agreement to be reached now about the use of a transfer scheme, for example, for a possible transfer of assets between TfL and DfT. I beg to move.

On Question, amendment agreed to.

Lord Bassam of Brighton moved Amendments Nos. 25 and 26:

On Question, amendments agreed to.

Schedule 12, as amended, agreed to.

Clause 47 agreed to.

Lord Bassam of Brighton moved Amendment No. 27:

(a) Transport for London or a subsidiary of Transport for London enters into an agreement or arrangements with the Secretary of State (alone or with other persons), and(b) for purposes connected with Crossrail, provision is made in the agreement or arrangements for the transfer of any property, rights or liabilities of Transport for London or a subsidiary of Transport for London to the Secretary of State or a company which is wholly owned by the Secretary of State.

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(a) under subsection (1) of section 163 of the 1999 Act for any disposal of a freehold interest in land, or grant of a leasehold interest in land, which is made in accordance with the provision referred to in subsection (1)(b), or(b) under subsection (2) of that section for any transaction so made.(a) the reference to the transfer of any property includes the creation of an interest in, or right in relation to, the property, and(b) the reference to a company wholly owned by the Secretary of State is to be construed in accordance with the provision made by paragraph 3(2) of Schedule 12.

On Question, amendment agreed to.

Schedule 13 [Transfer schemes: tax provisions]:

Lord Bassam of Brighton moved Amendments Nos. 28 to 34:

On Question, amendments agreed to.

Schedule 13, as amended, agreed to.

Clauses 48 and 49 agreed to.

Schedule 14 agreed to.

Clause 50 agreed to.

Schedule 15 agreed to.

Clauses 51 to 56 agreed to.

Clause 57 [Application of Act to extensions]:

On Question, Whether Clause 57 shall stand part of the Bill?

Lord Bradshaw: This brings us to the issue of the application of the Bill to extensions. Our amendment requiring the Government to seek permission under the Transport and Works Act to extend the line to Reading after a certain period was not accepted as drafted, and we accepted that because we do not wish to delay the Bill. However, everybody who knows anything about railways regards Maidenhead as a ridiculous place at which to terminate Crossrail. I have said before that it must have one of the highest rates of employment in the country. It would mean creating a train crew depot, a stabling point and all sorts of things on extremely valuable land with the prospect of it being almost impossible to get staff, whereas going to Reading, which has already been catered for in the plans for rebuilding Reading station, makes for a much more suitable terminus. I am not seeking for any reference to that in the Bill, but rather to know the Government’s intentions. There is also a strong conflict between people who want to see Crossrail as a metro service calling at all stations between Maidenhead and the other end in Essex—

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