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Mr. Spellar: It is not a question of representation. The purpose of the rail regulator is to provide a proper environment for regulation. I heard nothing in the hon. Lady's contribution to suggest that the Opposition oppose the recommendation of the Better Regulation Task Force that regulators should be overseen by a board. As the hon. Member for Bath said, the rail and water regulators are the last of the economic regulators to become corporate bodies. If the hon. Lady wishes to make that case, she must state definitively that the Opposition do not believe the model proposed is the right one and that the process should be stopped and reversed in relation to other regulators.
I do not know what the overall budget cost for the Office of Rail Regulation will be, because the ORR will set its own budget. No salaries have yet been set for the chairman and chief executive because it is too early. They will have to be agreed with the Secretary of State at a later date. The Bill's provisions on bankruptcy take into account the Enterprise Act 2000, which introduced bankruptcy restriction orders and interim orders. The grounds for dismissal from office are set out in paragraph 2(c) of schedule 1 in relation to England and Wales. I have already explained the bankruptcy provisions that relate to Scotland, and I am pleased to put that on the record for the benefit of the hon. Member for Bath.
It will be for the office itself to decide whether to delegate its functions to a committee. No further regulation is appropriate because the Bill provides for the necessary powers. The office and the Strategic Rail
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Authority have their own powers and are able to come to some arrangement, concordat or agreement about the relationship between them, which is more appropriate than to provide for the relationship in statute.
We do not expect there to be a significant increase in staffing as a result of the regulator being replaced by a regulatory board. The management of the office will be the responsibility of the Office of Rail Regulation, as it is of the single regulator at present. To summarise, a clear principle arising from the Better Regulation Task Force has been applied across the regulatory regime. Unless the hon. Member for Vale of York can come up with an overwhelming argument as to why the fundamental argument is wrong, which would entail reversing the creation of regulatory boards rather than an individual regulator across the industry, the Committee should reject her arguments and vote for the schedule.
Miss McIntosh: I posed some questions to the Minister, some of which he has answered. Their purpose was to find out why the new format is considered to be better. I do not say that we do not agree, but my hon. Friend the Member for Westmorland and Lonsdale clearly wants the Government to prove that it is an improvement, not merely a reaction to frustration with the regulators and the wrath that that has incurred in the Government.
I fear that the Minister is being economical in describing how far the reform is to go. We were told on 12 June 2002 that further reform could be required if the board of the Office of Rail Regulation failed to establish a constructive relationship with Network Rail. The Secretary of State described the guiding principles under which the Government have conducted their considerations and continued:
''The Government will need to continue to keep the effectiveness of the regime under review as the rail sector develops. The implementation of EU Directives already requires the Government to review the regulatory framework and adjust it in accordance with the Directives as necessary (the implementation of the First Railway Package of Directives is due by March 2003).''—[Official Report, 12 June 2002; Vol. 386, c. 1263W.]
We had the opportunity to set out in schedule 1, for the benefit of Parliament, exactly what the cost would be. We have to justify such things; we cannot give the Treasury a blank cheque. However, we have not progressed, despite a comprehensive debate. The schedule could have gone further, so I register my disappointment and my wish to return to the matter.
Question put and agreed to.
Schedule 1, as amended, agreed to.
Clause 15
Transfer of functions
Miss McIntosh: I beg to move amendment No. 53, in
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(a) set the contractual and financial framework within which Network Rail works to maintain, renew and expand the network;
(b) ensure that Network Rail's income, a combination of private finance and public subsidy set by the Office of Rail Regulation, is spent on the right things at the right times; and
(c) approve agreements governing the terms and conditions by which train operators gain access to the track and infrastructure and licenses all operators'.
The hon. Member for Bath is ahead of me. Many of the points that I wanted to make in relation to this amendment would have been ruled out of order had I made them in relation to schedule 1. Some of them also relate to schedule 2, but I shall try to save them until the appropriate time.
We tabled amendment No. 53 because we are clear what the present rail regulator does and what his function and purpose are but, mysteriously, I can find no definition anywhere in the Bill, including in the schedules, of the function of the Office of Rail Regulation. Schedule 2, particularly the chart on pages 51 and 52, is deeply confusing. This is by way of assistance to the Government, and I hope that they will accept it as such. Surely, they cannot have intended to leave out a simple, precise definition of what the Office of Rail Regulation is expected to do—hence our amendment. It is no secret that I did not make it up; I had assistance from a Government source. If that is plagiarism, I plead guilty to plagiarising the Government's description of the functions of the rail regulator.
Mr. Foster: I read the amendment with considerable interest, and the hon. Lady correctly points out that it is plagiarism. Therefore, I do not understand the need for it. Clause 15(1) says that
''The functions of the Rail Regulator are hereby transferred to the Office of Rail Regulation.''
That clearly states that the functions will be carried out by the new body. Therefore, there is no need to repeat them. I am at a loss to understand the need for the amendment.
Miss McIntosh: I am a simple soul. I believe that the functions should be stated clearly in the Bill. We have already come across one or two difficulties in schedule 1, and today we are discussing a Bill that will amend the 1993 Act, no copies of which are available. Would it not be simpler to include a description of the functions in the Bill? The Secretary of State said that the Government wish to keep the matter under constant review. A parliamentary question on that subject received a rather lengthy answer on 12 June of last year, at column 1262W. It was of some concern, when we were expecting the Bill, that the Secretary of State went on record in that way.
If the Secretary of State is asking the House to keep the functions of the Office of Rail Regulation under constant review, we must know what the functions are. Even the Select Committee, under the distinguished chairmanship of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), was not satisfied in its report ''Passenger Rail Franchise and the Future of Railway Infrastructure'' that it was entirely clear
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about the functions of the rail regulator. The rail regulator gave us a helpful written response, from which I would like to quote. At Ev 291 to the first report of Session 2001–02, he most helpfully states,
''The Regulator has a number of statutory duties. These duties are set by Parliament and can be removed only by Parliament. If the definition of burden and interference is regulatory action carried out in the course of the Regulator exercising his functions by discharging his duties, that is a function of legislation passed in 2000 and brought into force on 1 February 2001.''
We are not assisted by the fact that that Act is not available in the Room either. For the purposes of clarity in debate on the Bill, hon. Members need to know precisely what the regulator's role will be.
10 am
The regulator went on to say:
''When Railtrack was privatised, it was done with a weak regulatory system which did not meet the needs of its customers or the public interest. The Regulator's programme for the reform of Railtrack's accountability, which is almost complete, has been widely supported by the industry and Parliament, including the Transport Sub-Committee and the Public Accounts Committee. It would be remarkable if, now that the infrastructure provider is to be recreated or restructured following the railway administration of Railtrack, the strengths of the regime created in the last two years and so recently completed were to be taken out and the weaknesses which caused so many problems in the past retrofitted.''
The evidence continues:
''In respect of Railtrack or its successor''
—and its successor is now with us as Network Rail—
''as the Regulator said in his oral evidence to the Sub-Committee, the major failing of Railtrack's management to date has been their lack of focus on their customers and on the actions they should have taken to ensure the competent stewardship of their assets. The greater the customers' dissatisfactions in relation to the adequacy of an industry's asset stewardship plans, the more any regulator will be called upon to intervene. Had Railtrack done the things it should have done to satisfy its customers and plan for the long-term health of its assets, the Regulator would not have had to intervene to require the company to do them. The Regulator does not consider that he required of Railtrack anything that a competent and efficient company would not have chosen to do for itself.''
The final paragraph elucidates matters very well:
''For the railway industry as a whole, whatever the structure, there will be a need for regulation in respect of safety, performance and efficiency, with specific controls to prevent the abuse of monopoly power wherever that might arise.''
I simply ask why the Government are not minded to write the provisions of the Transport Act 2000 into the Bill. Would not it have been clearer to specify the functions in the Bill? It is possible, I admit, that I am the only one who finds pages 51 and 52 of the Bill particularly confusing. However, I think that it would be enormously helpful to set out what the Office of Rail Regulation is being asked to do.
The Select Committee was sufficiently concerned to state, in conclusion (t) on page 39 of its report:
''While the need for an independent economic regulator with clearly defined responsibilities, duties and objectives will continue, the respective roles of the Regulator and the Strategic Rail Authority should be reviewed.''
I repeat that while amendment No. 53 does not encompass the question of the role of the Strategic Rail Authority, the Government might want to take the opportunity before Report of responding to the Select Committee's request to set out the relationship
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between the new Office of Rail Regulation and the Strategic Rail Authority.
Conclusion (u) on page 39 of the Select Committee report is also pertinent. It states:
''While private sector companies remain involved in the railways, it is clear that the industry must have an independent Regulator. However, if the Strategic Rail Authority is to play a strategic role, it should be given sole responsibility for allocating funds and deciding how network track capacity be used, and overall responsibility for rail infrastructure. Even though it may take some time before any legislative changes are in place, we further recommend that the Government presents its proposals for changing the regulatory regime before Railtrack's successor emerges from the process of administration.''
That did not happen, but the legislative framework is before us and I plead with the Government to do what the Select Committee recommended.
Conclusion (b) of the minority report on page 56 states:
''If the Strategic Rail Authority is to remain a viable force the Government must allow the authority to operate independently and free from Government interference. The Strategic Rail Authority must be held to its responsibilities to publish an annual report and an updated strategic plan.''
We may wish to return to that matter, which raises the question whether the Office of Rail Regulation will be required to publish an annual report and accounts and, if so, whether the House or the appropriate Select Committee will have an opportunity to debate them.
Schedules 2 and 3 relate to the transfer of functions. I am disappointed that the clause does not state what those functions should be. The functions of the Office of Rail Regulation are broadly as we outlined them and the Library has produced a lengthy resumé of the role of the rail regulator, which states:
''The powers allow him to set the contractual and financial framework''.
We agree that the original regulatory framework was not tight enough and none of us wants the unfortunate scenario involving the rail regulator and the previous Secretary of State to be repeated. In the interests of clarity, it would be helpful if the Government included in the Bill the helpful suggestion in one of their own documents. The Library research paper states that part of the role of rail regulator should be to ensure
''that Network Rail's income . . . is spent on the right things at the right times.''
The paper continues for four pages setting out the functions of the rail regulator. It is staggering that the Bill as drafted does not set out the core functions of the Office of Rail Regulation.
I submit the amendment in a spirit of helpfulness. When we discuss the remaining schedules, I hope that the Minister will see why this part of the Bill should be the least controversial. The Committee wants a strong Office of Rail Regulation. If we are to replace an individual with a board, it is essential to know what its functions will be. I hope that the Government will accept this short, tidy, neat and helpful amendment.
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